Litigation Ethics: Representing Corporations and Other ... · Litigation Ethics: Representing Corporations And Other Organizational Clients Kenneth R. Berman Nutter McClennen & Fish

ABA Section of Litigation, 2013 ABA Annual Meeting, August 8-12, 2013: “The All New Litigation Ethics Quiz Show 2013: Representing Corporations”

Litigation Ethics: Representing Corporations and Other Organizational Clients Moderator: Kenneth Berman Nutter McClennen&Fish, LLP Boston, MA Speakers: Cornell Boggs Dow Corning Corporation Midland, MI Lawrence J. Fox Drinker Biddle & Reath LLP Philadelphia, PA Prof. Deborah R. Rhode Stanford Law School Stanford, CA

ABA Annual Meeting, August 8, 2013:

The All New Litigation Ethics Quiz Show 2013: Representing Corporations

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Litigation Ethics: Representing Corporations And Other Organizational Clients

Kenneth R. Berman

Nutter McClennen & Fish LLP

Boston, Massachusetts

© 2013 Kenneth R. Berman

INTRODUCTION

Representing corporations is not easy. A company’s legal problems can be complex. But solving them

is often not the biggest challenge. Legal problems aside, lawyers who represent corporations practice

in an ethics minefield. If you don’t watch out, you can easily step on an ethics issue buried just

beneath the surface. Even if you’re very careful, these ethics landmines can still explode. The

dilemmas may not be of your own making. Sometimes we inherit them. Sometimes our clients, our

partners, our associates, or circumstances beyond our control impose them on us. Sometimes we

simply fail to recognize them, either because we’re not fully aware or because they do not trigger a red

flag.

The corporate quandary

Handling a corporation’s legal work is particularly risky. Because corporations are inanimate and can

only act through agents, the lawyer may be unable to recognize which constituents embody the client.

Is the corporate client the directors, the officers, the employees, or the shareholders? What if their

interests are not aligned? Does the corporation itself have interests different from those expressed by

the constituents from whom the lawyer takes direction? How does the lawyer recognize and deal with

these potentially divergent interests? To whom does the lawyer owe the duty of loyalty or the duty of

disclosure? Whose confidences must the lawyer protect? What should be done when the lawyer’s view

of the corporation’s best interest conflicts with the views of the constituents who engaged the lawyer?

Corporations are often members of a corporate family. They have parent and grandparent companies,

sister companies, and subsidiaries. Some corporate clients are from mixed families, not wholly

belonging to a single parent. What does the lawyer do when a corporate client is adverse to a company



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related to another client? Does the nature of the relationship between the companies matter and, if so,

how do we know when the relationship is so attenuated that the conflict issue disappears?

Corporations face legal and business issues that, by their nature, seem to entangle their lawyers in

ethics issues. For example, to control expenses, a company asks its lawyer to provide an alternative

fee agreement in which the lawyer gets a fixed fee, regardless of how much or how little work the

lawyer performs. Do ethics issues lurk in this arrangement? Or say a corporate client puts pressure on

its lawyer to resolve a pending dispute. The lawyer suggests that the client deal directly with the

opposing party, but the client asks the lawyer to ghostwrite a letter for the client’s signature to kick off

the negotiations and bypass the opposing party’s lawyer. What do the rules of professional

responsibility say about that?

Model Rule 1.13

The Model Rules of Professional Conduct have a separate rule – 1.13 – devoted entirely to

representing organizational clients. One chief purpose of the rule is to give guidance when, in the

course of a representation, the lawyer learns that someone in the company is about to violate a legal

obligation. This circumstance puts the lawyer in the crosshairs between the duty of loyalty, duty of

care, and duty of confidentiality. The rule attempts to put these into balance by discussing when the

lawyer is either required or permitted to disclose the information or take other action. In one section,

for example, the rule states:

If a lawyer for an organization knows that an officer, employee or other person associated with the

organization is engaged in action, intends to act or refuses to act in a matter related to the

representation that is a violation of a legal obligation to the organization, or a violation of law that

reasonably might be imputed to the organization, and that is likely to result in substantial injury to

the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of

the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest

of the organization to do so, the lawyer shall refer the matter to higher authority in the organization,

including, if warranted by the circumstances to the highest authority that can act on behalf of the

organization as determined by applicable law.

Unfortunately, the rule exposes the lawyer to the risk of being second guessed, with potential

disciplinary consequences for making a move someone else, in hindsight, concludes was wrong. For

example, the rule imposes a standard that depends on what the lawyer “knows” about the constituent’s

actions or intended actions, when the line between what the lawyer “knows” and what the lawyer

merely has “reason to believe” may not be so clear and when the lawyer may be unaware of all the

facts, including some that might put the conduct in a different light. And before the lawyer’s duty to

act is triggered or before the lawyer’s response is shielded by the rule, the lawyer must know that the

constituent’s conduct violates a legal obligation, even though the question of a violation is often

subject to great debate and disagreement. Further, the lawyer must know that the conduct is “likely” to

result in “substantial” injury to the organization, requiring the lawyer to separate the probable from the

possible and to know when a quantum of likely injury qualifies as substantial.

Then, once the lawyer has concluded these circumstances exist, the lawyer is required “to proceed as

is reasonably necessary in the best interest of the organization.” The rule does not identify what those

steps might be, leaving it to the lawyer’s judgment – measured against a vague standard of reasonable



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necessity – to decide what to do. If the lawyer were to report the conduct, say, to the FBI, the lawyer

could potentially be disciplined if a bar overseer later concludes that such reporting was not

reasonably necessary. The rule’s very next sentence requires the lawyer to take the specific step of

reporting the conduct to a higher authority in the organization, a duty excused only if the lawyer

reasonably believes – again the same vague standard – that such reporting is unnecessary.

The rule is a strange combination of commands to take action and safe harbors for either acting or not

acting. To be sure, the rule’s adoption of reasonableness standards – e.g., reasonable necessity and

reasonable belief – undoubtedly gives the lawyer some discretion in deciding what to do. But what

might appear reasonable in foresight or from the lawyer’s perspective might be unreasonable from

hindsight or the perspective of someone else. It is difficult to tell whether the rule was intended to

protect the client or the well meaning lawyer, although one could argue it was meant to do both. One

thing is clear however. The rule illustrates why representing corporations is hard. There are serious

ethical obligations and equally serious risks, while the path to the correct outcome is often poorly lit.

Flavors and stripes

What follows are illustrative ethical dilemmas a lawyer can easily confront when representing

corporations and other organizational clients. These dilemmas show not only the many flavors and

stripes in which ethical quandaries appear, but why their resolution is so difficult. There seldom is an

easy answer. The problems are typically enshrouded in gray and bathed in nuance.

Each of these dilemmas tees up an ethics issue and presents an analysis, based on the assumption the

ABA Model Rules of Professional Conduct govern. The arguments on either side of the question are

meant to identify issues and risks in an even handed way, highlight some of the more obvious matters

that need to be considered, and show the difficulty in determining the proper result. In some instances,

there is a discussion of how a bar ethics opinion or court has addressed the issue. Until there is a

consensus, however, the result in one jurisdiction may not foretell the result in another. Further, the

governing rules may vary from state to state, as the ABA Model Rules have not been adopted verbatim

in all states.

DILEMMA: COMMUNICATING WITH A REPRESENTED OPPONENT

Frustrated by the pace of settlement negotiations, the client urges the lawyer to wrap things up by

year’s end. The lawyer explains that opposing counsel is unreasonable and that the client would be

better off negotiating directly with the opposing party because the clients on both sides have an

incentive to settle not shared by opposing counsel. When the client expresses a lack of confidence in

writing a letter directly to the opposing party to begin negotiations, the lawyer offers to ghostwrite the

letter for the client to sign and send on company letterhead, noting that bypassing the opposing lawyer

in this way may be just what is needed to get the deal done.

Discussion

Many believe that a lawyer may not ghostwrite a letter for the client to send to a represented

adversary. Model Rule 4.2 provides that a lawyer may not communicate with a represented party on

the subject matter of the representation without the opposing attorney’s consent, and Rule 8.4 provides



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that lawyers may not attempt to violate the rules through the acts of another or engage in dishonest or

fraudulent conduct. Those who hold this view believe that ghostwriting a letter to the party on the

other side and having the client sign and send it is an attempt to violate Rule 4.2 through the client and

is dishonest in violation of Rule 8.4.

On the other hand, a client has the right to write to an opposing party directly, even if the party is

represented by counsel. Those who believe a lawyer may ghostwrite such a letter argue that

counseling a client on whether to exercise this right and how to do so is what lawyers do and is part of

the duty of diligent and competent representation. Further, if the client were to write to the opposing

party without any help from the lawyer, the client might say the wrong thing, which would prejudice

the client and be a disservice. Rule 4.2 is meant to prevent lawyers from taking unfair advantage of

represented parties or from soliciting admissions from them. Those who find no ethical issue argue

that these concerns are not presented by ghostwriting such a letter because the opposing party is

simply receiving the letter and is free to discuss it with the opposing attorney.

In 2011, the ABA issued Formal Opinion 11-461, which holds that “Parties to a legal matter have the

right to communicate directly with each other. A lawyer may advise a client of that right and may

assist the client regarding the substance of any proposed communication. The lawyer’s assistance need

not be prompted by a request from the client. Such assistance may not, however, result in overreaching

by the lawyer.”

DILEMMA: DISCLOSING PUBLICLY AVAILABLE INFORMATION

In the course of defending a high profile client in a well publicized securities fraud suit, the client tells

the lawyer that the client was sued 10 years earlier in a securities fraud class action and paid $20

million in a court-approved settlement. Later, as a panelist on a CLE program discussing his

experience in the just-concluded suit, the lawyer reveals that his work in that matter was complicated

because of the earlier litigation that the client settled for $20 million. The lawyer adds that he is not

telling tales out of school because the $20 million settlement is a matter of public record, as it was

approved in open court ten years ago after an evidentiary hearing that was open to the public, and that

the terms of the settlement can be obtained in a Google or PACER search.

Discussion

With certain inapplicable exceptions, Model Rule 1.6 provides: “A lawyer shall not reveal information

relating to the representation of a client unless the client gives informed consent [or] the disclosure is

impliedly authorized in order to carry out the representation.” Those who believe the lawyer

committed no ethical violation would note that the purpose of the rule is to keep a client’s information

confidential, and the rule itself is entitled “Confidentiality.” They would point out that the information

is already in the public domain and easily obtainable through an internet search. Because any other

lawyer on the CLE panel could have gotten the same information and discussed it at that CLE

program, it would be an anomaly if all the other lawyers were free to discuss this public information

but not the one lawyer who represented the client. Interpreting the rule to bar the lawyer from

discussing this information, so the argument goes, would be unreasonable, inconsistent with common

sense, and excessively literal. The lawyer should not be penalized for discussing information that was



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freely available to the public, particularly when the purpose of the discussion was to improve the legal

profession.

Those who believe the lawyer was wrong to discuss the ten year old settlement would point out that

the rule is not limited to information the client communicates to the lawyer in confidence but covers

any “information relating to the representation.” They would argue that this ten year old information is

obviously related to the representation, and, although it might be publicly available to anyone who is

of a mind to search for it, the client is entitled to have the lawyer not publicize the information and

increase the level of public awareness. In this instance, the lawyer made a disclosure of the

information for his own benefit and not for the benefit of his client, when the client was entitled to the

lawyer’s silence.

In Attorney Disciplinary Bd . v. Marzen, (Iowa, No. 08-1546, 3/19/10), the Iowa Supreme Court sided

with the view that the disclosure of client information is not excused simply because the same

information could be obtained from publicly available court records. In that case, a client accused her

former lawyer of sexual misconduct, an accusation that received a great deal of public attention as the

lawyer was running for a county office. To defend his reputation, the lawyer pointed out that his client

had brought an earlier proceeding in which she accused her probation officer of sexual misconduct.

The Iowa Supreme Court held that “the rule of confidentiality is breached when an attorney discloses

information learned through the attorney-client relationship even if that information is otherwise

publicly available.”

Some states take a more moderate approach. In Massachusetts for example, an advisory comment to

Rule 1.6 states that “widely available” or “generally known” information is not protected by the rule:

[N]ot every piece of information that a lawyer obtains relating to a representation is protected

confidential information. While this understanding may be difficult to apply in some cases, some

information is so widely available or generally known that it need not be treated as confidential. The

lawyer's discovery that there was dense fog at the airport at a particular time does not fall within the

rule. Such information is readily available. While a client's disclosure of the fact of infidelity to a

spouse is protected information, it normally would not be after the client publicly discloses such

information on television and in newspaper interviews. On the other hand, the mere fact that

information disclosed by a client to a lawyer is a matter of public record does not mean that it may

not fall within the protection of this rule. A client's disclosure of conviction of a crime in a different

state a long time ago or disclosure of a secret marriage would be protected even if a matter of

public record because such information was not generally known.

See also Restatement of the Law Governing Lawyers §59 (2000) (information learned from a client is

confidential unless it is “generally known in the relevant sector of the public”). Yet in an apparent

departure from the Massachusetts rule, which recognizes an exception for generally know information

but holds that information is not generally known simply because it is in the public record, the

Restatement states that “[i]nformation contained in books or records in public libraries, public-record

depositaries such as government offices, or in publicly accessible electronic-data storage is generally

known if the information is obtainable through publicly available indexes and similar methods of

access.” Id. § 59 cmt. d. The Model Rules appear to take the most conservative approach, as they

make no mention of generally known or available information.



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DILEMMA: TECHNOLOGICAL COMPETENCE

A junior lawyer comes to her supervising senior partner and asks whether the client’s electronically

stored information should be produced in native format or in single page TIFFs. The senior lawyer,

who has difficulty with emails and does not use a computer except to send an occasional email, does

not know the difference between a native production and a TIFF production and is not in a position to

advise the associate. The senior lawyer does however remark that it is comforting to have the junior

lawyer on the case and will defer to her on this issue because of her superior knowledge about

computers.

Discussion

Has the senior lawyer breached the duty to provide competent representation? Model Rule 1.1 says

that “A lawyer shall provide competent representation to a client. Competent representation requires

the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

It says nothing about technological capabilities. The comment to the rule says that, in determining

whether a lawyer is providing competent representation, factors to consider include “whether it is

feasible to . . . associate or consult with a lawyer of established competence in the field in question.”

Those who argue that the senior lawyer need not develop any technical proficiency would say that the

lawyer has an associate who is abreast of the latest technological developments, and it is therefore not

“reasonably necessary” for the senior lawyer to understand the nuances of electronic discovery.

The contrary argument recognizes that this is a changing world where skills that would suffice in an

earlier day are no longer adequate. Given that, by some accounts, 95% of all information is stored

electronically, that clients can lose cases if electronically stored evidence is mishandled, and that the

cost to the client of waging litigation is a direct function of how electronically stored information is

handled, one might argue that a working familiarity of how electronic evidence is stored and produced

is an occupational necessity for trial lawyers. Those who hold this view would argue that the very fact

the associate asked the senior lawyer to make a decision on this question arguably shows that, if the

senior lawyer knows so little that he has to defer to the associate who sought the senior lawyer’s

advice on this very question, the senior lawyer’s technological illiteracy violates the duty to provide

competent representation “necessary for the representation.”

In August 2012, the ABA amended the official comments to Rule 1.1, to add the following italicized

words: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the

law and its practice, including the benefits and risks associated with relevant technology, engage in

continuing study and education and comply with all continuing legal education requirements to which

the lawyer is subject.”

DILEMMA: CONFLICTING DUTIES – RESPECT FOR RIGHTS OF THIRD

PARTIES VS. DILIGENT REPRESENTATION

A lawyer receives an email from opposing counsel, stating: “I am attaching a revised draft of the

settlement agreement in Word format. Note that this has ‘tracked changes’ so you can see how we

changed the last draft. Please review and send me your comments. Let’s try to wrap this up.” In

moving the mouse over the document, the lawyer notices embedded comments hidden from view until

they are opened. Opening one of them, the lawyer sees a note that says “Cave on this if they give us



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push back.” The lawyer then finds another hidden comment that says, “I’ll go to 10 million if

necessary.”

Discussion

This dilemma raises questions as to whether the lawyer free (or required) to review the embedded

comments after discovering the first one and whether the lawyer was free (or required) to inform his

client about them? There are two potentially conflicting obligations here: the lawyer’s duty under

Model Rule 1.3 to “act with reasonable diligence in representing a client” and the lawyer’s duty under

Model Rule 4.4 not to obtain evidence in violation of the rights of third parties. The comment to Rule

4.4 states that a lawyer may not engage “in unwarranted intrusions into privileged relationships, such

as the client-lawyer relationship.”

There seems to be no question the lawyer was permitted to open the first comment. According to the

comments to the model rules, Rule 1.3 requires the lawyer to “take whatever lawful and ethical

measures are required to vindicate a client’s cause or endeavor” and “act with commitment and

dedication to the interests of the client.” The lawyer who sent the document is the gatekeeper of his or

her client’s information. Presumably, the sending lawyer knew or ought to have known about track

changes and comments. The sending lawyer wanted the receiving lawyer to see the changes, which

was why the track changes feature was used. Very often when the track changes feature is used, the

sending lawyer also puts comments into the document as well, as these explain the sending lawyer’s

position. In opening the first comment, the receiving lawyer had every right to believe that the

comment was meant to be opened and read. The receiving lawyer might argue that it was fair to

assume the first comment was the only unintended comment, until opening the second one. As

between the sending lawyer, who sent the document intending the receiving lawyer to read it carefully,

and the receiving lawyer, whose job was to review it carefully and who had a right to assume that the

sending lawyer weeded out any client confidences, the receiving lawyer would argue it was

permissible to read both the first and second hidden comment.

The sending lawyer would see this differently. Once the receiving lawyer saw that the first comment

was obviously written by the opposing party and intended as a confidential communication to the

opposing party’s counsel, the lawyer should have realized the document, in that form, was

inadvertently sent, as no lawyer would knowingly send such a document to an opposing attorney with

the client’s confidential comments included. Rule 4.4 speaks to this. It states: “A lawyer who receives

a document relating to the representation of the lawyer’s client and knows or reasonably should know

that the document was inadvertently sent shall promptly notify the sender.” Not having notified

opposing counsel, the receiving lawyer had no right to continue reading the document, for there may

well have been other inadvertently included attorney-client communications. Further, Rule 8.4(c) bars

a lawyer from engaging in conduct involving dishonesty. The sending lawyer would say it was

dishonest for the lawyer to continue reading these confidential comments and to justify the behavior

by arguing that the sending lawyer wanted the entire document to be read.

Bar opinions on the subject are somewhat more forgiving than the sending lawyer might have hoped.

The ABA’s Formal Opinion 06-442 states that “The Model Rules of Professional Conduct do not

contain any specific prohibition against a lawyer's reviewing and using embedded information in

electronic documents, whether received from opposing counsel, an adverse party, or an agent of an

adverse party.” It goes on to say, however, that if the lawyer knows or reasonably should know that



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metadata was inadvertently sent, then the lawyer has a duty to notify the other lawyer, but is not

obligated to return it or to refrain from reading it. In a similar ethics opinion issued last year, the

Washington State Bar Association (Informal Opinion 2216) said that, in circumstances like these, the

lawyer who receives a document with confidential notes is under a duty to notify the sender, but is not

ethically obligated to stop reading it or to return it. In contrast, the District of Columbia Bar’s Ethics

Opinion 341 (Sept. 2007) says that if the lawyer has actual knowledge that the metadata was

inadvertently provided, the lawyer must find out from the sending lawyer whether the metadata

contains privileged information. If the sending lawyer says yes, then the receiving lawyer must follow

the sending lawyer’s instructions. But if the receiving lawyer is uncertain about whether the metadata

was inadvertently provided, the receiving lawyer may read the metadata, apparently without having to

notify the sending lawyer. This different approach might be explained by slight differences between

the District of Columbia’s version of Rule 4.4 and the ABA Model Rules.

The Minnesota Lawyer’s Professional Responsibility Board issued an opinion (No. 22) in 2010 saying

that the sending lawyer has an ethical responsibility to scrub an electronic document of all metadata

that that lawyer is obligated to keep confidential. Under such an ethics opinion, a receiving lawyer

might argue that all hidden comments, including comments from the opposing party to the opposing

lawyer, were reviewable on the presumption that, in tendering the document, the sending lawyer

scrubbed the document of any metadata intended to be confidential.

DILEMMA: ALTERNATIVE FEE AGREEMENTS

A lawyer and client enter into a flat fee agreement by which the client agrees to pay the lawyer

$100,000 for all legal advice requested by the client for the next 12 months, regardless of how much

or how little advice the client seeks. The client is very glad to have this agreement, knowing its legal

fees for the year are fixed, and pays the $100,000 in advance.

Discussion

The issue is whether a lawyer may enter into a pre-paid flat fee arrangement regardless of how much

or how little time is expended. While flat fee agreements are permissible in many instances, one issue

is whether they are permissible when the agreement allows the lawyer to keep the fee even if no

services are provided. Rule 1.5 states: “A lawyer shall not make an agreement for . . . an unreasonable

fee. The factors to be considered in determining the reasonableness of a fee include the following: (1)

the time and labor required....” If the lawyer ends up doing no work, can the agreement ethically

permit the lawyer to keep the six figure fee? Some may argue that, to be reasonable, the agreement

must have provisions that relate the fee to some level of service.

The contrary view recognizes that this arrangement was sought by the client, not the lawyer, and that

each side was taking a reasonable risk. If the client wanted to consume $300,000 of legal time, the

bargain would have been a great benefit to the client at the lawyer’s expense. We don’t accuse

insurance companies of engaging in unfair practices for charging premiums when the insured ends up

never needing to file a claim. The same can be said here: the client receives a benefit knowing the

advice is there if needed, and the client can get as much advice as it wants. This agreement is simply a

creative way to control the spiraling costs of legal services.



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But the issue becomes muddied when considering such things as whether the lawyer may deposit the

pre-paid fee into the lawyer’s operating account, given the prohibition on intermingling client funds

with the lawyer’s funds. At what point has the lawyer earned the fee such that the lawyer may

appropriate it? And what should happen if, before the year is over, the client discharges the lawyer and

seeks to recover a portion of the fee. Is the client entitled to all of it, none of it, a portion of it

depending on how much of the year has transpired, or some other amount depending on how much of

the lawyer’s services the client has already used, given Model Rule 1.16(d)’s mandate that any

unearned portion of a fee paid in advance be returned. In its Formal Ethics Opinion 93-4, the

Wisconsin Bar noted that what might start out as a reasonable fee agreement could become

unreasonable after the fact, citing as an example if the client dies shortly after the agreement is made

or if the attorney quits or is discharged for cause. This underscores the need for having an agreement

specifying how and when the fee is earned, i.e. when the money no longer belongs to the client but

becomes the lawyer’s.

DILEMMA: CONFLICTS – LATERAL EMPLOYMENT

After hiring a lateral partner, the managing partner inquires whether the lateral ever worked on a

matter being handled by the lateral’s former law firm in which the current firm is representing the

other side. The lateral reveals that he did a little work on the case when it first came in, specifically

drafting a protective order for the senior partner’s review and fielding some strategy questions on a

discovery issue, but spent no more than 20 hours on the case in total. The managing partner solicits

and obtains the lateral’s agreement not to speak with any of the lawyers in the new firm about that

case and not to do any work on it.

Discussion

May the new firm continue to represent the client or has the hiring of the lateral created a

disqualifying conflict? This issue invokes the application of Model Rule 1.10 involving imputed

conflicts. The rule provides, with some exceptions, that no lawyer in a firm “shall knowingly represent

a client when any one of them practicing alone would be prohibited from doing so.” The rule

accommodates lateral mobility, however, by further providing that disqualification is not required

when there is no significant risk the other lawyers in the firm would be materially limited in

representing the client, the lateral lawyer is timely screened from any participation in the matter and is

apportioned no part of the fee from it, and written notice is promptly given to any affected former

client to enable the former client to ascertain compliance with the provisions of the rule.

The argument for disqualification is that the screen is ineffective, and that something more is required

than simply getting the lawyer’s oral agreement not to work on the case or discuss it with anyone in

the new firm. One could argue that, at the old firm, the lawyer’s involvement was not trivial and that it

was more extensive than what the lateral lawyer claims. The lawyer’s work on a protective order, for

example, presumably required the lawyer to understand the nature of the former client’s confidential

information and the lawyer may well have been privy to it. The lawyer also discussed strategy. An

effective screen, therefore, would arguably require at a minimum that the lawyer agree in writing not

to talk to anyone about the case and that the lawyers and support personnel in the new firm be

informed in writing not to discuss the matter with the lateral. Also, the files of the case would arguably



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need to be made physically inaccessible to the lateral, including with legends on them warning that the

lateral may not have access to them, and including making the electronic case files inaccessible to the

lawyer on the firm’s computer system. And there would need to be a system of periodic reminders

about these restrictions.

The sufficiency of a screen is often subject to debate and some courts take a restrictive view. In June

2012, a federal judge (Beltran v. Avon Products, Inc., No. 2:12-cv-02502, C.D.Cal. June 1, 2012) ruled

that no screen would be effective to cure the conflict because the incoming lawyer was privy to

confidential information of the client in his former firm. Similarly, in January 2012, the Montana

Supreme Court (Krutzfeldt Ranch LLC v. Pinnacle Bank, Mont., No. 11-0213, Jan. 31, 2012) held

that, where the incoming lawyer did not formally terminate the representation when he moved to the

new firm, the new firm was conflicted and had to be disqualified, regardless of any screening.

Generally speaking though, a screen can be an effective way to prevent a conflict if done right, which

includes formally terminating the previous representation, informing the former client about the new

employment, and establishing screening procedures that are as rigorous as the circumstances require.

DILEMMA: CONFLICTS – LITIGATING AGAINST THE CLIENT’S SISTER

COMPANY

A partner is asked to defend a suit brought by the sister company of a current firm client. The current

client is an independent subsidiary whose business is unrelated to that of the sister company. The

firm’s work for the current client is limited to preparing and prosecuting patent applications having no

relationship to the subject matter of the lawsuit. Although the corporate law department of the parent

company processes the legal bills and reviews the legal and matter budgets for all companies within

the corporate family, the firm concludes there is no legal conflict and takes the case.

Discussion

For many years, the conventional view was that a lawyer representing a corporation can never handle

a litigation against the corporation’s parent company, subsidiaries, or sister corporations. Following

this view, the argument for disqualification is that the benefit of the doubt cuts in favor of the existing

client, to whom the firm owes a duty of loyalty. Although the current rules do not craft a per se rule

barring a firm from litigating against a client’s sister or affiliated company, the question of conflict is

one of fact, turning on interrelatedness and other factors. Here, the two companies are joined at the

legal department in the parent company. The legal department has some supervision over the activities

of the law firm, as evidenced by its review and approval of bills and budgets. Presumably, the legal

department would consider it a violation of the duty of loyalty for the patent lawyer to handle a matter

against another company in the corporate family and therefore would expect that, under rules of

imputed disqualification, no one else in the firm may do so either. This is not a case where the two

companies are truly independent and isolated from each other, with completely independent

management and internal legal counsel.

The argument against disqualification rests on Model Rule 1.7, comment 34, which provides that the

representation of one company does not necessarily make every affiliated company a client for

conflict purposes:



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A lawyer who represents a corporation or other organization does not, by virtue of that

representation, necessarily represent any constituent or affiliated organization, such as a parent or

subsidiary. . . . Thus, the lawyer for an organization is not barred from accepting representation

adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate

should also be considered a client of the lawyer, there is an understanding between the lawyer and

the organizational client that the lawyer will avoid representation adverse to the client’s affiliates, or

the lawyer’s obligations to either the organizational client or the new client are likely to limit

materially the lawyer’s representation of the other client.

Those who see no conflict would argue that, as a basic fact of modern corporate life, a lawyer’s

knowledge of confidential information from one member of a large corporate family is not

information that could give the adversaries of an affiliate an advantage, and a judgment against one

subsidiary will not adversely affect other subsidiaries. Corporations that choose to do business as

separate entities, they would argue, ought not to be able to get the benefits of separateness without

also accepting the burdens of separateness. Companies ought not to be able to pick and choose when

they want to be recognized as separate entities (for, say, limited liability purposes) and when they want

to be recognized as alter egos (for conflict purposes). Here, the patent infringement work performed

for subsidiary A is unrelated to the sister company, making it permissible to represent a new client in a

suit against the sister company.

In 1995, the ABA issued Formal Opinion No. 95-390, in which a divided ethics committee concluded

that representation of one company in a corporate family does not necessarily disqualify the firm from

representing a client in an unrelated matter against the parent, subsidiary, or affiliate of the first

company. In the eyes of the committee’s majority, whether the firm may take on the unrelated matter

against the parent, subsidiary, or affiliate turns on a variety of circumstances, such as whether the

lawyer and client have a reasonable expectation that the lawyer serves as counsel for the related

entities, whether confidential information from the related entity was given to the lawyer, whether

management between the related companies is intertwined, whether the same in-house lawyer

supervises the work of outside counsel for the related entities, and whether the representation of the

second client can have an adverse effect on the first client. An additional consideration is whether the

lawyer’s handling of the respective representations might materially limit the lawyer’s or law firm’s

ability to discharge the duties owed to each client.

Reported case law on this topic has reached differing conclusions. Compare Brooklyn Navy Yard

Cogeneration Partners, L.P. v. Superior Court, 70 Cal. Rptr. 2d 419 (Cal. Ct. App. 1997) (approving

law firm’s representation of one client in a matter adverse to the parent corporation of another client of

the firm, except where the parent and subsidiary are alter egos) with Travelers Indemnity Co. v.

Gerling Global Reinsurance Corp., 2000 U.S. Dist. LEXIS 11639 (S.D.N.Y. 2000) (disqualifying law

firm from representing one client in a matter adverse to the sister corporation of another client of the

firm, where the two sister corporations shared numerous resources).

DILEMMA: REPRESENTING THE CLIENT’S COMPETITOR

A lawyer represents company X in defense of a suit brought by a customer charging systematic and

fraudulent overpricing. In an unrelated matter, the lawyer’s firm represents company Y, a competitor

of company X, in a covenant not to compete suit, where company Y is attempting to stop the head of



12

sales and marketing from joining a third competitor. Company Y demands that the firm cease

representing company X.

Discussion

This dilemma raises the issue of whether and when a law firm would be conflicted from representing

the competitor of a client. Without more, the mere fact that one client is a competitor of another does

not ordinarily create a disqualifiable conflict.

One problem, however, is that such dual representation increases the likelihood that one client might

give the law firm access to confidential information that could be useful to the competitor and thus

used to the detriment of the client who provided it. Although no self-respecting law firm would

knowingly allow any lawyer to use confidential information from one client to aid another client, and

although the firm might even establish ethical walls to prevent an inadvertent use or disclosure of each

client’s information, this does not necessarily make the problem go away.

The conflict issue ordinarily does not depend on how useful the information might be to the

competitor, or even on whether such confidential information has in fact passed from the first client to

the law firm. If the lawyer or law firm received confidential information in the representation of the

first client and if the later representation of the competitor is substantially related to the representation

of the first client, there is often a rebuttable presumption that confidential information was shared.

Depending on the effectiveness of the law firm’s screening procedures and establishment of ethical

walls, a firm may be able to avoid a conflict issue or a disqualification motion. However, depending

on the nature of the two representations, the amount of involvement of the lawyer in the affairs of the

first client, and the substantiality of the relationship between the two representations, an ethical wall

may not be adequate to protect against disqualification. For an analysis of this problem, see Maritrans

GP, Inc. v. Pepper, Hamilton & Scheetz, 529 Pa. 241 (1992).

DILEMMA: CONFLICTING DUTIES – CONFIDENTIALITY VS. DISCLOSURE

AND LOYALTY

The CEO of a corporate client informs the company’s outside counsel that the CEO is planning to

leave the company at the end of the year to join a company that sells a similar product. The CEO

instructs the lawyer not to tell anyone in the client company about the CEO’s plans until the CEO is

ready to announce it in about four months. The CEO explains that the current company and new

company, though selling similar products, are not competitors because the current company sells only

in the commercial sector while the new company sells only in the military sector. The CEO also

explains that, if the lawyer were to tell anyone in the company, the news would be disruptive and

detrimental to the company.

Discussion

May the lawyer may – or must the lawyer – disclose the CEO’s plans to the board of directors. The

CEO claims that a premature disclosure would be disruptive to the organization, but the lawyer may

feel that the CEO’s desire for secrecy is to hide that the CEO is about to migrate to a potential

competitor. Moreover, concealing the information would deprive the company of the ability to take



13

pre-emptive protective measures, including steps to prevent the CEO from taking company

confidential information and trade secrets to the new employer.

The argument that the CEO’s information must be kept confidential and not disclosed to others in the

company is rooted in Model Rule 1.13. A corporate client has many constituents who collectively

constitute the company and who may have individual interests that are adverse to the company but

whose information must be communicated to the lawyer in confidence so that the lawyer can

effectively represent the company. Rule 1.13(b) says:

If a lawyer for an organization knows that an officer, employee or other person associated with the

organization is engaged in action, intends to act or refuses to act in a matter related to the

representation that is a violation of a legal obligation to the organization, or a violation of law which

reasonably might be imputed to the organization, and that is likely to result in substantial injury to

the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of

the organization.

Those who would argue for keeping the information confidential would say that it would be difficult

for the lawyer to “know” whether the CEO’s contemplated action violates a legal obligation to the

company or would likely result in substantial injury to the company. If, as the CEO claims, the new

employer is not a competitor, or if the CEO is not a party to a non-compete agreement, then there may

well be no violation of a legal duty. Further comment 2 to this rule says in relevant part: “When one

of the constituents of an organizational client communicates with the organization’s lawyer in that

person’s organizational capacity, the communication is protected by Rule 1.6. . . . The lawyer may not

disclose to constituents [of the organizational client] information relating to the representation except

for disclosures explicitly or impliedly authorized by the organizational client in order to carry out the

representation or as otherwise permitted by Rule 1.6.” Under this comment, because the lawyer has

not been authorized to report the CEO’s information to other constituents, but rather has been

explicitly instructed by the CEO not to do so, it is not the lawyer’s role to second guess the instruction

and reveal the CEO’s information to the directors.

However, an argument for disclosure can also be made. One might analogize to Rule 1.7 comment 31,

which addresses disclosure issues when a lawyer has more than one client in a common

representation:

As to the duty of confidentiality, continued common representation will almost certainly be

inadequate if one client asks the lawyer not to disclose to the other client information relevant to the

common representation. This is so because the lawyer has an equal duty of loyalty to each client,

and each client has the right to be informed of anything bearing on the representation that might

affect that client’s interests . . . . The lawyer should, at the outset of the common representation and

as part of the process of obtaining each client’s informed consent, advise each client that

information will be shared and that the lawyer will have to withdraw if one client decides that some

matter material to the representation should be kept from the other.

Essentially, in a common representation, one client may not keep secrets from the other if the

information bears on the representation and might affect the other client’s interest. Here, the CEO is

not even a client, but rather a representative of the client. If they were common clients, the lawyer

would presumably have a duty of disclosure to the company under Rule 1.7. The case for disclosure

therefore should be even stronger here, where the sole client is the company.



14

Rule 1.13 also is relevant because part (a) makes clear that the company and not its constituents are

the client. Part (f) and comment 10 also indicate that, when the interests of the company and the

constituent are in conflict, the lawyer must inform the constituent that the lawyer represents the

company and that conversations between the lawyer and the constituent may not be privileged (Rule

1.13 (f) and comment 10). Also, while the lawyer might not know whether the CEO is under an

obligation not to move to a potential competitor, the lawyer might reasonably conclude that the CEO

is violating other duties to the company, i.e. duties of good faith, loyalty, and disclosure of material

information. Because the lawyer could reasonably conclude that the failure to inform the company

would likely injure the company substantially through its inability to take adequate and timely

measures to transition to a new CEO, those who argue for disclosure would say that Rule 1.13 (b)

authorizes and may well require the lawyer to disclose the information to the directors.

DILEMMA: CONFLICTING DUTIES – CONFIDENTIALITY VS. RESPECT FOR

RIGHTS OF THIRD PARTIES

To forestall a lawsuit, a lawyer advises his client’s CEO to sign a memorandum of understanding

agreeing to escrow an expected $2 million insurance payment as security for the opposing party’s

claims as a prelude to negotiating or mediating the claims. A week after signing it, the CEO tells the

lawyer that the company will not escrow the insurance payment because it needs the money to meet

operating expenses. When the lawyer reminds the CEO of the written agreement promising to escrow

the money, the CEO says that the company cannot honor it or else the company will fold by the end of

the month. The lawyer tells the CEO that he will need to alert the opposing attorney and try to

renegotiate the agreement. The CEO instructs the lawyer not to do that, explaining that the decision

not to escrow the money is confidential and that, if the opposing party were to learn of it, the opposing

party would file a lawsuit, which would trigger a default under the company’s loan covenants.

Discussion

Here, the lawyer is caught between his client’s instruction to keep the imminent breach confidential

and what the lawyer perceives as an obligation to disclose a material fact to the opposing counsel,

namely the client’s decision to renege on an agreement that was just recently signed and that the

lawyer negotiated.

The argument for not disclosing the information is that Model Rule 1.6 (b) imposes a near-absolute

rule of confidentiality. To be sure, the rule requires a lawyer to reveal a confidence “to the extent the

lawyer reasonably believes necessary to prevent the client from committing a . . . fraudulent act that

the lawyer reasonably believes is likely to result in . . . substantial injury to the financial interest . . . of

another.” But the lawyer has no justification for believing the client is committing a fraudulent act.

The evidence of fraud is ambiguous at best. Although the client’s statement of intention to renege

follows closely after signing the agreement, the lawyer does not know that the client signed the

contract intending to renege. The lawyer must give the client the benefit of the doubt and presume the

client intended to perform but later had a change of heart upon realizing performance would put the

company in an impossible position. Because this is a breach, not fraud, the lawyer must keep the

information confidential. The opposing party was represented by counsel, who could have negotiated

for a monitoring or reporting provision. The failure to do so should not cast on the lawyer for the



15

reneging party a duty to disclose the client’s breach. The lawyer’s duty is to protect the client’s

interest, not the other party’s.

The contrary argument would be based on the premise that the evidence of the client’s fraud is

overwhelming. When the client signed the agreement, the client had to have known that the insurance

money would be needed for other things. The client made the escrow concession only when the

lawyer counseled the client to do it. The well-meaning and creative lawyer conceived of the escrow as

a means to resolve the client’s predicament and got both the client and the opposing party to agree to

it. Even if the client did not sign the agreement with fraudulent intent, the lawyer’s failure to disclose

the client’s imminent breach would be dishonest in violation of Model Rule 8.4, which prohibits a

lawyer from engaging in conduct involving dishonesty. After getting the opposing party to agree to

this forbearance agreement, it would be dishonest to allow the opposing party to remain ignorant of

the client’s willful breach of the very promise that induced the forbearance. Whether the client signed

the contract intending to breach it or formed the intent to breach shortly after signing the agreement,

the failure to disclose the breach is dishonest either way and the lawyer, so the argument goes, is duty

bound to remedy the situation, even if that requires disclosing the client’s intent.

DILEMMA: DUTIES TO PROSPECTIVE CLIENTS

An employee of a corporate client has been dealing with a young partner in the firm on company

business. One morning, the employee calls the young partner, reports that her manager has been

sexually harassing her, and asks the young partner to file an employment discrimination case against

the company. The young partner explains that, because the company is a firm client, the firm would

have a conflict of interest and therefore cannot represent the employee in her claim against the

company. The employee says that she understands, but tells the young partner not to tell anybody

because, if word leaked out, the company would just cover everything up and make her life miserable.

Believing that the relationship partner should know about this, the young partner tells the relationship

partner about the conversation. The relationship partner states that the client must be informed or else

the firm will lose the client, but the young partner objects, believing that the rules against disclosure of

client confidences also apply to potential clients and that the employee was a potential client to whom

the firm now owes a duty of confidentiality.

Discussion

This dilemma raises the issue of when a person becomes a “potential client” entitled to the lawyer’s

duty of confidentiality. The young partner views the employee as a potential client to whom the duty

of confidentiality is owed, even though the firm would be barred by a conflict from accepting the

engagement. The young partner’s views are premised on Model Rule 1.18, which states:

(a) A person who consults with a lawyer about the possibility of forming a client-lawyer relationship

with respect to a matter is a prospective client.

With an exception not relevant here, the rule further states:

(b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a

prospective client shall not use or reveal that information . . . .



16

In the younger partner’s mind, when the employee revealed that she wanted to bring a claim for sexual

harassment and wanted the firm to represent her, she became “a person who discusses with a lawyer

the possibility of forming a client-lawyer relationship with respect to a matter.” This made her a

prospective client and hence the duty of confidentiality attached. As the younger partner sees it, the

employee had no understanding about rules on conflicts of interest and hence had a reasonable

expectation of confidentiality. Therefore, the lawyer would not be free to disclose the confidences of

the employee, as a potential client, to anyone, including to any other client. This duty exists, according

to comment 3 of the rule, “regardless of how brief the initial conference may be.”

The contrary argument would look to comment 2 to Rule 1.18, which states that when “a person

communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer

is willing to discuss the possibility of forming a client-lawyer relationship, [the person] is . . . not a

‘prospective client.’” The relationship partner believes that that’s what happened here. The employee

revealed this information to the younger partner unilaterally, who was, if not sandbagged, then at least

caught unawares. Given that the employee knew that the lawyer was counsel for the company, it

would not have been reasonable for the employee to expect that the lawyer would be willing to accept

an engagement against the company. The fact that the employee might have been ignorant about

conflict of interest rules and imputed conflicts does not change the analysis, for the “reasonable

expectation” standard is objective, not subjective.

This dilemma highlights a potentially serious additional issue, as Rule 1.18 may well prevent the law

firm from representing the current client in any sexual harassment claim brought by the employee. The

rule mandates not only confidentiality but disqualification, subject to limited exceptions. Once the

duty of confidentiality to a potential client is triggered, the lawyer:

(c) . . . shall not represent a client with interests materially adverse to those of a prospective client

in the same or a substantially related matter if the lawyer received information from the prospective

client that could be significantly harmful to that person in the matter, except as provided in

paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a

firm with which that lawyer is associated may knowingly undertake or continue representation in

such a matter, except as provided in paragraph (d).

(d) When the lawyer has received disqualifying information as defined in paragraph (c),

representation is permissible if:

(1) both the affected client and the prospective client have given informed consent, confirmed in

writing, or:

(2) the lawyer who received the information took reasonable measures to avoid exposure to more

disqualifying information than was reasonably necessary to determine whether to represent the

prospective client; and

(i) the disqualified lawyer is timely screened from any participation in the matter and is

apportioned no part of the fee therefrom; and

(ii) written notice is promptly given to the prospective client.



17

This rule should alert a lawyer to understand the context of a conversation at the earliest opportunity

to figure out whether the person is potentially seeking legal advice or representation. If so, the

conversation should cease until the adverse parties are identified and a conflict check clears.

DILEMMA: CONFLICTS WITH A CLIENT’S EMPLOYER

A lawyer receives a call about taking on a matter adverse to a company that the firm has never

represented. However, the company’s CEO has been a longstanding personal client of the firm. The

attorney who handles the CEO’s work has handled the CEO’s estate plan, personal investments, and

personal business deals unrelated to the company. The attorney has also advised the CEO from time to

time on how to respond to certain problems at the company and how to deal with certain directors.

The lawyer who received the call wants to accept the engagement, believing there is no conflict

because the firm never represented the company. The lawyer who handles the work for the CEO

believes there is not simply a business conflict but a legal conflict.

Discussion

Is the company to be treated as a client for conflict purposes because of the firm’s representation of a

high level constituent of the company? The lawyer who sees no conflict feels the issue is governed by

Rule 1.13, which is premised on the idea that, while an organizational client may act only through its

constituents, the constituents are not the client. The organization is the client. Logic would therefore

suggest that when a law firm represents an individual constituent in a personal capacity, the

organization is not the client. The individual is the client. Hence, there would be no conflict if the firm

accepted an engagement adverse to the company.

The lawyer who sees a conflict analyzes the situation differently. Rule 1.13 does not establish that the

constituent of an organizational client is not the client. Comment 34 to Rule 1.7 states that “A lawyer

who represents a corporation or other organization does not, by virtue of that representation,

necessarily represent any constituent.” It thus may still be the case, depending on the facts, that the

representation of an organization may mean that the constituent is to be regarded as a client as well.

The same principal should operate in reverse: depending on the facts, the representation of a

constituent may mean that the organization is to be regarded as a client too for conflict purposes. Here,

through representing the CEO, the lawyer has been privy to information about the company. Indeed,

because the CEO is so closely aligned with the company, the lawyer believes that, for all practical

purposes, the company should be treated as if it were also a client of the firm, the same way that, when

a parent company closely controls its subsidiary, the representation of the parent makes the subsidiary

a client for conflict purposes, and vice versa. Moreover, a conflict exists when the representation could

be materially adverse to the interest of a current client. The lawyer who feels there is a conflict

foresees that the proposed representation of a new client in a matter adverse to the company could

impair the interests of the CEO materially, because the engagement could impair the CEO’s standing

in the company or because what hurts the company also hurts the CEO. A conflict also exists when

there is a significant risk that the representation of a client will be materially limited by the lawyer’s

responsibilities to another client or by a personal interest of the lawyer. Model Rule 1.7 (a) (2). The

lawyer who represents the CEO obviously has duties (and feelings) of loyalty to the CEO that would



18

bar that lawyer from representing a party in a matter adverse to the company. This conflict is imputed

to all the other lawyers in the firm. Model Rule 1.10.

This issue was addressed by the District of Columbia Bar in 2005 in its Ethics Opinion 328.

According to that opinion, the issue is whether the organization has become a “de facto client,” which

involves looking at such considerations as the organization’s expectations and the firm’s receipt of

information confidential to the organization. The opinion says: “Given the cross-fertilization with

upper management and the sensitivity of the issues likely to be encountered in such a representation,

the organization may have a reasonable expectation that the lawyer will not be adverse to it in another

matter,” but the determination “will be fact-dependent.”

DILEMMA: CONFLICTING DUTIES – CONFIDENTIALITY VS. DILIGENT

REPRESENTATION

A client is being investigated for allegedly violating a regulation regarding certain disclosures

associated with shipping products overseas. Whether there is a violation turns on the interpretation of

the regulation. In the course of the representation, the client tells the lawyer that another company,

which the lawyer represented in the past, engages in the same practice, and that this establishes the

standard in the industry, which the client feels is relevant to how the regulation should be interpreted.

The client asks the lawyer to point this out to the government. The lawyer had drafted shipping

contracts for the former client but lacked any knowledge of the former client’s disclosure practices

under the regulation, which was not a subject of the contract. The lawyer asks the current client

whether the information about the former client’s disclosure practices is common knowledge in the

industry. The current client says that it depends on who is asked, but that the information is important

and needs to be argued to the government.

Discussion

In this dilemma, the lawyer must decide whether to treat as confidential certain information learned

about a former client after the representation has concluded. The information relates to the former

representation in a broad sense but is brought to the lawyer’s attention by a current client, who wants

the lawyer to use the information in advocating a position to the government. The lawyer is uncertain

whether the duty under Model Rule 1.6 (a) not to “reveal information relating to the representation of

a client” applies to information learned about a former client from an independent source after the

representation has concluded.

The argument that the information may not be used looks to the words of Rule 1.6 (a), which

commands the lawyer to keep confidential “information relating to the representation of a client.” It is

not limited to information learned from the client or learned during the representation. Moreover,

comment 3 to the rule says that the rule applies “to all information relating to the representation,

whatever its source.” There is a very practical reason why the lawyer believes this information must

be treated as confidential: its use could result in the government turning its attention to the practices of

the former client. The former client would argue that use of the information would therefore not only

violate the duty of confidentiality but the duty of loyalty.



19

The current client however would urge the lawyer to use the information because the current client is

entitled to the lawyer’s diligent representation. The argument that the information is available for the

lawyer’s use turns on giving the word “relating” a common sense, practical meaning. In the former

representation, the lawyer was never asked to provide legal advice on the disclosure practices at issue

or on the regulation. In fact, the lawyer was surprised to learn this information from the current client

because it did not come up in the former representation. If the current client went to some other lawyer

with the same information, the other lawyer would not be disabled from using the information, and the

current lawyer arguably should not be disabled from using it either.

The practical resolution is for the lawyer to refer the current client to some other attorney who does

not have even an arguable duty to keep the information confidential. But the practical solution begs

the questions whether the information is protected if learned after the representation is concluded or

from a source other than the client, or whether the information is related to the former representation,

or whether the information is off limits if brought to the lawyer’s attention by a current client in the

same industry. Restatement (Third) of the Law Governing Lawyers § 59 answers some of these

questions. The rule “covers all information relating to representation of a client . . . gathered from any

source. . . .” Id. cmt. b. The rule also covers information “acquired . . . after the representation . . . so

long as it is not generally known . . . and relates to the representation.” Id. The Restatement does not,

however, answer whether the information is “related” to the former representation or whether it is

generally known. The safest approach is to assume the information is related to the earlier

representation but whether it is generally known “depends on all circumstances relevant in obtaining

the information.” Id. Unlike the Restatement though, the Model Rules contain no explicit exception

for generally known information, although one might rightly or wrongly believe that, as a matter of

logic, such an exception would be implicit.

CONCLUSION

At the extremes, the ethical outcomes are clear and lawyers know how to avoid crossing boundaries.

But these dilemmas show there are vast gray areas where the boundaries are not at all clear. Further, in

many instances the ethical quandary could be thrust upon the lawyer by external circumstances, where

the lawyer confronts some spontaneous event, like suddenly learning information that imposes a duty

to do one thing or another.

Some of the most difficult issues involve conflicting ethical duties, arising from rules that point in

different or opposite directions or that create risks because the lawyer has to choose between

conflicting ethics principles. Should the lawyer disclose information or must the lawyer keep it

confidential? Are there times when the lawyer’s duty to a third party overrides the lawyer’s duty to a

client?

We study these dilemmas not because they illuminate the answers but because they do not. These

dilemmas sensitize lawyers to understand that ethics issues do not stop once the conflict check clears

but persist throughout a representation and can continue long after the representation ends. These

dilemmas teach that, in resolving an ethics problem, the rules of professional conduct often tee up an

issue without resolving it. Making a decision on the proper course of conduct requires careful analysis,

research, and reasoned judgment, sometimes without ever reaching comfort as to where he correct

path lies, and common sense may not always offer the right solution.



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ABOUT THE AUTHOR

Kenneth R. Berman

Kenneth R. Berman is a partner in the Litigation Department of the Boston law firm Nutter

McClennen & Fish LLP. His practice focuses on complex business and commercial disputes,

intellectual property litigation, land use litigation, and public law disputes.

Mr. Berman is admitted to practice in Massachusetts and before the United States Supreme Court, the

United States Court of Appeals for the First, Fourth, and Federal Circuits, and the United States

District Courts for the District of Massachusetts and the Eastern District of Michigan.

Mr. Berman frequently writes and lectures for local and national audiences on topics of current legal

interest, legal ethics, high profile litigation, and advanced litigation techniques. He previously served

as a legal commentator for WBZ-TV in Boston and on the Board of Editors of the Boston Bar Journal.

Mr. Berman’s articles have appeared in Litigation (the Journal of the Litigation Section of the

American Bar Association), the National Law Journal, and the Boston Globe, among other

publications.

Mr. Berman is an active member of the American Bar Association and Boston Bar Associations. In the

American Bar Association, he is a member of the Litigation Section, where he is Co-Chair of the

Corporate Counsel Committee, member and former Co-Chair of the of the Business Torts Committee,

and member of the Intellectual Property and Trial Practice Committees. He is a former member of the

Boston Bar Association’s Council and Executive Committee, and a former chair of the Boston Bar

Association’s Litigation Section and Torts Committee. Mr. Berman is also former chair of the

Massachusetts Joint Bar Committee on Judicial Nominations, which reviews, evaluates, and makes

recommendations on the qualifications of individuals under consideration for judicial appointments in

Massachusetts.

Kenneth Berman received a J.D. degree with high honors, from the University of Connecticut School

of Law, where he was an editor of the Connecticut Law Review. He received a B.A. from Yale

University.

Kenneth R. Berman

Nutter McClennen & Fish LLP

World Trade Center West

155 Seaport Boulevard

Boston, Massachusetts 02210

(617) 439-2542

[email protected]

Documents

Litigation Ethics: Representing Corporations and Other ... · Litigation Ethics: Representing Corporations And Other Organizational Clients Kenneth R. Berman Nutter McClennen & Fish